Aug. 2 (Bloomberg) -- Kazakhstan’s central bank cut its
refinancing rate to a record after inflation eased for a second
month, bringing price growth further below the regulator’s
target range.

The National Bank of Kazakhstan reduced the benchmark rate
by a half-point to 5.5 percent, effective Aug. 6, the Almaty-based regulator said in an e-mailed statement today. The biggest
energy producer in central Asia last decreased borrowing costs
in June.

“We had not expected the NBK’s easing to be so aggressive
as inflation risks remain high in the country,” Julia
Tsepliaeva, head of research at BNP Paribas SA in Moscow, wrote
by e-mail. “The new cut may mean that the NBK tends to
prioritize economic growth.”

Kazakhstan, which reduced its main rate for a fourth time
this year, is following emerging economies from Brazil to India
in lowering borrowing costs to ease credit flows and spur
growth. While the government predicts the economy of the second-biggest oil producer in the former Soviet Union will gain 7
percent this year and maintain that pace of expansion until
2015, gross domestic product grew 5.6 percent in the first
quarter from a year earlier.

Inflation Slows

Consumer-price growth last month decelerated to 4.7 percent
on an annual basis, the slowest since March and down from 4.9
percent in June. The inflation rate may be closer to the lower
level of the central bank’s target range of 6 percent to 8
percent by the end of this year, Chairman Grigori Marchenko said
July 25, Profinance website reported.

The central bank has shaved 2 percentage points off its key
interest rate since the start of the year as inflation stayed
below its target range every month in 2012. That helped fuel
credit expansion and cut the share of non-performing loans in
the banking system to 30.9 percent in the second quarter,
according to BNP Paribas.

Kazakhstan’s inflation will end the year at “no more
than” 7 percent, Deputy Prime Minister Kairat Kelimbetov said
May 24. That compares with 7.4 percent at the end of last year.